After The Close - The stock market put in a mixed performance today, as traders digested the latest batch of corporate profit reports. At the close of the session, the Dow Jones Industrial Average was ahead 40 points; the broader S&P 500 Index was up two points; and the NASDAQ was nominally lower. Market breadth was slightly negative, as declining issues outnumbered advancers by a narrow margin on the NYSE. From a sector perspective, the healthcare and utility issues showed some leadership, while the financials, energy, and basic materials issues retreated.
Traders received a few economic news items today. Specifically, export prices rose 1.0%, and import prices advanced 0.3%, during the month of September. For the most part, these readings do not yet suggest that inflation is an area of great concern. Elsewhere, industrial production increased 0.3% during the month of September. This figure came in ahead of expectations and was a big improvement over the weak production report posted in August. Tomorrow we will get a look at housing starts and building permits for September. Then, in the afternoon, the Federal Reserve is slated to deliver its Beige Book summation for the month of Oct.
Finally, a number of widely-held companies posted their quarterly profit reports today. In the Dow Jones Industrial Average, shares of Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report) and United Healthcare (UNH - Free United Healthcare Stock Report) rallied in response to positive news. However, shares of Goldman Sachs (GS - Free Goldman Sachs Stock Report) traded lower, as investors may have some concerns about the investment bank’s trading revenues.
Technically, the stock market has been holding up reasonably well lately. The third-quarter earnings season has just begun, and it is likely too early to tell if further gains are in store. - Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
12:25 PM EDT - After setting record highs yesterday, the major equity indexes got the day off in mixed fashion, and that pattern held true for most of the morning’s session.
The latest nuclear warnings out of North Korea, and the prospects of yet another missile launch appear to be taking a back seat to earnings season, at least for now. On that front, there have been a number of favorable reports from some big names today. Strength in Morgan Stanley’s (MS) wealth management and investment banking businesses more than offset declines in bond-trading revenues, boosting its net income by 12% versus last year. It was a similar story with Goldman Sachs Group (GS – Free Goldman Sachs Stock Report), where net income increased two percent, as revenue from equity investments topped declines in fixed-income and equity trading revenue. Meanwhile, Johnson & Johnson (JNJ – Free Johnson & Johnson Stock Report) and UnitedHealth Group (UNH – Free UnitedHealth Group Stock Report) both issued earnings that topped estimates. Later today we’ll be hearing from International Business Machines (IBM – Free IBM Stock Report), followed by Alcoa (AA) and American Express (AXP – Free American Express Stock Report) tomorrow, and Verizon (VZ – Free Verizon Stock Report) and Travelers (TRV – Free Travelers Stock Report) on Thursday.
Elsewhere, the National Association of Home Builders reported that confidence among homebuilders jumped to a five-month high. Rebuilding efforts in the wake of the recent hurricanes in Florida and Texas are likely to give an added boost to business in the months ahead, while general demand conditions continue to strengthen. Meanwhile, factory production in the U.S. edged up for the first time since June.
As we passed the noon hour of trading in New York, the Dow Jones was out in front with a 20-point gain, after briefly crossing the 23,000 mark for the first time in its history. The broader S&P 500, which has wavered above and below the unchanged mark all morning, was a couple of points below breakeven, while the tech-heavy NASDAQ was down by three. Taking a look at the major market sectors, decliners were in the majority, led by basic materials with a loss of about half a percentage point. Healthcare stocks were the only notable advancers, up about half a percent, helped by the aforementioned gains in J&J and UnitedHealth.
Turning to the key European bourses, trading started the session on a down note, rallied in the afternoon, but faded as the closing bell approached, with Britain’s FTSE, Germany’s DAX and France’s CAC-40 dipping modestly into the red. – Mario Ferro
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
Before The Bell - Another week, another early start to the upside for the U.S. stock market. Indeed, on the heels of last week's modest move to the upside by equities, Wall Street began the latest five-day span by pressing higher, with the Dow Jones Industrial Average and the tech-laden NASDAQ both climbing to all-time highs in the morning's trading. At their best levels in the early going, the blue chip composite was ahead more than 70 points, while the NASDAQ's morning best gain was over 25 points.
However, after that fast start, things settled back, so that as we ended the first half of the trading day, the Dow's gain, which reflected ongoing optimism on the earnings front (as Corporate America continues to release results for the third quarter) and evolving hopes that whatever the dysfunction now in Washington, a meaningful tax reform package will get passed. Shorter term, Congress must still pass a budget, and that drama will be playing out over the next few days.
Meanwhile, on the earnings front, after we heard from some big financial names last week, the next four days will bring even more reports, with the focus on the large-cap sector and some key corporations, such as Verizon (VZ - Free Verizon Stock Report). Expectations for the period are modest, and well shy of the big gains secured in the first and second quarters of this year. Much of the stock market's recent strength, though, has been predicated on a big showing by the major companies. Now, with equity prices elevated, they will need to deliver.
Also on the docket are some pivotal economic reports, including metrics on industrial production and factory use later this morning. Then, tomorrow and still later in the week, we will get important data points from the housing market, when results on housing starts, building permits, and sales of existing homes are issued. Expectations are modest, with flattish results or even small declines the consensus view. All of this following last Friday's strong release on retail sales, which saw a 1.6% surge in spending in September.
As to the market, after the stellar early start, a more mixed pattern developed, as losing stocks pulled narrowly ahead of winning issues on both the Big Board and the NASDAQ by the early afternoon, while the small-cap fueled Russell 2000 dipped below the neutral line. The stock market then steadied into the early afternoon, even gaining some traction as the session moved along. In all, we were looking at a flat-to-slightly higher performance by equities as the session continued.
The key large-cap indexes then continued to strengthen, with the Dow, the S&P 500 Index, and the NASDAQ each setting yet one more all-time high, as the averages ended matters fairly near their respective session highs, with the Dow concluding matters ahead by 85 points, the S&P 500 ending up by four points, and the NASDAQ climbing 18 points,. Among the day's big Dow winners were shares of the tech icon Apple (AAPL - Free Apple Stock Report), with nearly a three point advance. However, gainers and losers were narrowly ahead of winners on the NYSE and the NASDAQ.
Looking ahead to a new day, we see that shares in Asia were higher in the overnight hours, while in Europe, the principal bourses are mixed so far this morning. Elsewhere, gold prices are down; Treasury yields are generally flat; and oil is showing further gains on rising tensions with Iraq and Iran in early dealings. Finally, U.S. equity futures are little changed in early dealings, following yesterday's flat-to-incrementally higher session. - Harvey S. Katz, CFA